Re: [CANSLIM] Earnings

From: "Tom Worley" <stkguru@bellsouth.net>
Subject: Re: [CANSLIM] Earnings
Date: Mon, 29 Apr 2002 21:59:46 -0400

Next Article (by Author): Re: [CANSLIM] Earnings "Tom Worley"
Previous Article (by Author): RE: [CANSLIM] M where now? "Hill, Ernie"
Next in Thread: Re: [CANSLIM] Earnings "Tom Worley"
Articles sorted by: [Date] [Author] [Subject]

I am no expert on the calculation of GDP. As I understand it, it's
essentially like a double negative. The past declines in inventory was
keeping GDP low as it was subtracted. Because the decline in inventories was
so much slower by comparison, the subtraction was lessened. Here's an
excerpt snipped from CNN Money:

"Bush pointed out that the biggest boost to GDP came from business
inventories, which shrank at a much slower rate of $36.2 billion in the
first quarter, down from $119.3 billion in the fourth quarter.
The way the Commerce Department measures the change in inventories means
that the $83.1 billion difference between the first and fourth quarters
actually added to growth in the first quarter, since inventories shrank at a
much slower rate, boosting GDP by 3.1 percentage points.

"The single most significant number is the inventory number," said Kelly of
Putnam Investments. "The rebuilding of inventories hasn't even started yet.
When they do, it will be a major source of additional stimulus to the
economy."

Excluding the change in inventories, real sales of domestic product rose
about 2.6 percent after rising 3.8 percent in the fourth quarter.

Business spending also showed signs of stabilizing, falling by only $18.2
billion after shrinking $47 billion in the fourth quarter. "

Tom Worley
stkguru@bellsouth.net
AIM: TexWorley
- ----- Original Message -----
From: "Winston Little" <wlittle1@peoplepc.com>
To: <canslim@lists.xmission.com>
Sent: Monday, April 29, 2002 2:15 PM
Subject: Re: [CANSLIM] Earnings

My understanding of the 5.8% GDP is:

3.1% was due to removing inventory.
In other words, inventory on the shelf (goods produced some time ago) was
2.6%.

While 2.6% was for REAL FINAL SALES (or newly produced goods). Until all the
old inventory is gone the current activity is closer to this 2.6% for
adjusted GDP.

- ----- Original Message -----
From: <Spencer48@aol.com>
To: <canslim@lists.xmission.com>
Sent: Monday, April 29, 2002 2:01 PM
Subject: Re: [CANSLIM] Earnings

> Tom:
>
>      Perhaps you can (and will) explain this:  I understand that IBD
> concludes that a big part of the reason GDP was up so much in the 1st
quarter
> is less that the economy is getting as strong as the 5.8% would indicate,
but
> that inventory reductions were lower.
>
>      Does this mean that companies are replenishing inventories to what
they
> were duing the recession:  because the strong consumer sales reveal that
> there will be as much (but not more) consumer demand as in the recession?
>
>      IBD seems to be saying that Companies will not replenish inventory
> because they feel that consumer demand will not be as strong as the recent
> GDP indicates.  Is that the correct conclusion as to why a 5.8% increase
in
> GDP is not as good as it sounds?
>
> jans
>
>
>
> In a message dated 4/29/2002 10:08:59 AM Eastern Daylight Time,
> stkguru@bellsouth.net writes:
>
> << GDP for the Q1 was up for a variety of reasons, one of which was that
>  consumer sales remained strong, but a second, and more significant one,
was
>  that inventory reductions slowed appreciably. >>
>
> -
> -To subscribe/unsubscribe, email "majordomo@xmission.com"
> -In the email body, write "subscribe canslim" or
> -"unsubscribe canslim".  Do not use quotes in your email.
>

- -
- -To subscribe/unsubscribe, email "majordomo@xmission.com"
- -In the email body, write "subscribe canslim" or
- -"unsubscribe canslim".  Do not use quotes in your email.

- -
- -To subscribe/unsubscribe, email "majordomo@xmission.com"
- -In the email body, write "subscribe canslim" or
- -"unsubscribe canslim".  Do not use quotes in your email.

Go to Jeff Salisbury LWGate Home Page.